NEW YORK (AP) -- A Stifel Nicolaus analyst began covering several health care service companies Tuesday and placed a "buy" rating on shares of health care staffing company Team Health Holdings Inc.
Analyst Robert Mains said Team Health is winning more new contracts and has become more aggressive in buying competitors. The Knoxville, Tenn., company has made a string of acquisitions, including Midwest Emergency Associates in October and Exigence Group in May. Mains said the acquisitions and new contracts are making up for slower growth from the company's older contracts.
He set a price target of $26 on the stock. Team Health shares dipped 17 cents to close at $22.57.
Mains also began covering Healthcare Services Group Inc. and Kindred Healthcare Inc. — but with "hold" ratings.
Healthcare Services provides housekeeping and food services to hospitals and nursing homes, and Mains said there is a lot of room for growth in both markets because only a small portion of hospitals and health care facilities outsource those services. He said the Bensalem, Pa., company should continue growing because it can save money for its clients and allows them to focus on clinical services.
Mains said Kindred, of Louisville, Ky., is the biggest operator of long-term acute care hospitals, manager of rehab hospitals and provider of third-party rehab programs, and it is one of the biggest skilled-nursing facility companies. He said the company has been able to handle some cuts in Medicare payments, but the prospect of additional cuts makes its outlook uncertain.
Shares of Healthcare Services Group closed unchanged at $19.45, and Kindred shares picked up 6 cents to close at $8.23.
